Housing agency pays $6.8 million to lead paint victims

Using funds meant to help poor families find affordable places to live, Baltimore's public housing agency has paid nearly $6.8 million in long-standing court judgments for lead poisoning suffered by six former residents when they were young children.

The Housing Authority of Baltimore City refused for years to pay nearly $12 million in lead-paint injury judgments, saying it lacked the money. But then the agency began to satisfy some of the judgments, previously paying $5 million.

The latest payments, made last week, mark the first time the authority got federal approval to pay court judgments by dipping into funds it receives to operate public housing and subsidize rents for low-income families in private housing.

Housing Commissioner Paul T. Graziano said it was a difficult decision to pay the judgments — the funds would have been used to help pay rents for 700 households in a city with a severe shortage of affordable housing. The nation's fifth-largest housing authority serves 25,000 households in the city.

"Those are some of the choices we've had to make," he said in an interview Tuesday. Federal officials did not provide any additional money, he explained, but merely authorized the agency to use existing federal funds, which have been cut this year by Congress.

"We knew it was a zero-sum game," he said. "Whatever we paid out was that much less to provide assistance to households we're trying to serve."

The payments, which range from $365,000 to more than $4 million apiece, satisfy all outstanding court judgments against the housing authority for lead poisoning, though it still faces hundreds more lawsuits.

To cover the $5 million in earlier payments, the authority used some non-federal funds as well as money from the liquidation of two bankrupt insurance companies that once covered the authority against lead-paint liability.

"At long last, the lead-poisoned children who received judgments a long time ago finally received their compensation," said Brian S. Brown, the lawyer who represented the six plaintiffs whose judgments were paid last week. At least one of the lawsuits was filed nearly a decade ago, and a couple of the judgments were five and six years old.

"What gets me," Brown said, "is why did it take this long for them to step up when there was a court order against them?"

Ingesting even small amounts of lead can cause permanent brain damage in a young child, research has shown, stunting learning and contributing to behavior problems. Lead-based paint, once widely used in housing, has been banned since 1950 in Baltimore City and since 1978 nationwide. But much of the city's housing stock was built before the prohibition.

Graziano said the authority always had intended to honor its legal obligations, but held off while it sought to work out a "global solution" to hundreds of lawsuits filed by former residents who claim they suffered lead poisoning as young children in the 1990s or earlier. But those efforts came to naught, he said.

The authority has managed to fend off $1.4 billion in claims by winning 251 lead-poisoning lawsuits filed against it, he said. The agency still faces 316 other cases that have yet to be resolved, with claims totaling $929 million, he added.

"But even if a fraction of those cases go through," he said, "as you can see, it's millions and millions of dollars."

Graziano said the authority is exploring setting up a self-insurance fund. Such a plan also would need to be approved by U.S. Department of Housing and Urban Development, he said, and it would have to be financed by diverting federal funds meant to help poor people afford housing.

"There is no magic solution here," he said. "There are limits to what we can do."

The housing authority had commercial insurance at one time to cover lead-poisoning injury claims, but those policies were canceled in the mid-1990s. The agency defended itself against lead-paint lawsuits after that by arguing it had governmental immunity, but in 2009 the Maryland Court of Appeals ruled it had no such legal shield.

Brown, the plaintiffs' attorney, said the authority should have set up its own self-insurance fund years ago after commercial insurance dried up.

"If they had followed the law and insured or provided for insurance like the statute clearly says they are obligated to do, they wouldn't have that problem," the attorney said. He called it "reprehensible" that the authority is taking housing assistance for the poor to pay the judgments.

But Graziano said the authority has been severely cash-strapped for the past decade, so it would not have been any easier to set up self-insurance before now.

"We would have had to make serious sacrifices then," he said. "We've had to make serious sacrifices now."

Graziano said the flurry of lead-paint lawsuits against the housing authority in recent years all date back to exposures claimed before 1996, when a state law took effect requiring landlords to limit tenants' risk of lead poisoning by cleaning up and repairing their rental housing.

The agency has complied with that law despite shrinking federal support, the housing commissioner said. Congress has sliced more than 10 percent from $283 million in the federal funding budgeted for the agency this year, he noted.

Those who have pressed the housing authority to honor its legal obligations welcomed the latest payments. But they lamented the fact that it came at the expense of the Section 8 housing voucher program, which this year subsidized rents for 14,825 households, according to agency figures.

"So this means that fewer people will be able to live in an affordable and presumably safe rental housing," said Del. Samuel I. "Sandy" Rosenberg, a Baltimore city Democrat. He added that he hoped the authority was taking steps to limit its future liability.

"I'm glad to see that they're putting some closure to families that have been harmed living in public housing in Baltimore City that was not appropriate for them to live in," said City Councilwoman Helen Holton. She said she hoped the payments would help the agency meet its obligation to be accountable to public housing tenants.

"It's going to cost us all," said Councilwoman Mary Pat Clarke, "because some of that money that's going to be paid out is money that would have been spent in neighborhoods, I presume. But you've got to take care of families first if you're going to take care of the city."

Delivering on a promise that helped bring him victory, Gov. Tom Wolf is proposing an education budget for 2015-16 that seeks to restore funding for public schools and higher education that his predecessor Tom Corbett wiped way.